How does finance play a role in sustainable innovation in a global player in animal feed? Which key figures are central?
As a Dutch cooperative, Agrifirm has been active in the animal feed and related products industry for many years. Based on its mission 'Responsible food chain for future generations', the company makes a lot of efforts for sustainable innovation. We asked Thomas Bosschem, Finance Director, how finance plays a guiding role in this innovation process and which key figures are central.
Sustainability goes hand in hand with innovation
Sustainable entrepreneurship is given absolute priority within a global player such as Agrifirm. Thomas explains: “For our core business – the production of animal feeds, premixes, minerals, concentrates and additives – more than three thousand employees (from China to Uruguay) give the best of themselves every day. Every employee realizes that sustainability is at the heart of our business. To do this, we use a well-considered selection of the UN's seventeen Sustainable Goals as anchor points. To achieve these goals, innovation is a crucial factor. I divide innovation into product development and real innovation, which takes place disruptively and out-of-the-box. With the latter form, it is important to work carefully and smartly, so that the existing business is not disrupted.
Innovation corridors as an internal guideline
How does a global player like Agrifirm approach innovation? Thomas explains: “Innovation is not a linear process. As a result, it is not always easy to use hard KPIs as measuring instruments. In any case, I think that innovation should create value, instead of focusing on a specific cost target, for example). The right scope must also be established from the start, or in other words: properly define in which areas you want to use as a company, including a choice of what you do not want to do.”
“Within Agrifirm, we have defined six innovation corridors, or domains within our strategy in which we want to innovate. The theme of circularity is a random example of such a corridor. We then set up the right structure within each corridor, determine engagement with external parties and allocate budgets to projects. Sometimes an innovation project has a good chance of success, but sometimes we decide to pull the plug on a less successful project. Resources must be used as efficiently as possible.”
The role of finance within innovation
“With our finance team, we contribute in any case to ongoing projects (where profitability is and will remain the key driver), whereby we help through multidisciplinary teams in structuring, monitoring and reporting KPIs in these projects. In addition, I see that we can think out-of-the-box from finance to make new, sustainable projects a success. For example, we internally support colleagues who have a scouting role to identify partnerships – for example with start-ups and scale-ups) for innovation. Collaboration with such new partners can create many interesting opportunities to jointly develop new production technologies, for example. From finance we can draw up an agile budget, with the necessary flexibility to adjust a trajectory without losing sight of the final vision.”
Finance as a steering partner in partnerships
Thomas sees various possibilities for developing innovative partnerships: “As a company you have to define how you want to collaborate with external parties. Various options are possible: entering into a strategic partnership, participating in other companies, setting up a joint venture, setting up an internal fund that takes participations in startups and scaleups. From finance, we define the direction or type of collaboration that we as a company are most suitable for and work with. Doing small due diligence at small companies, following up on financial events, getting advice from external experts about partners,…”
How does Thomas Bosschem and his team tackle finance challenges within Agrifirm? And what impact did the Covid crisis have on the business? Listen to our podcast here.